Edor

Why It's Time for Muni Bonds

Follow-up to my earlier comment about risk and munis: I own individual munis and found out that they have, perhaps, significantly less risk even though they are revenue bonds. They are pre-funded bonds meaning that the issuer purchased and put in escrow US treasuries with the same maturity so the stream of payments is indirectly "guaranteed" by US gov't yet one still gets the beneficial tax treatment. As I said originally I rarely deal directly with munis and have only rudimentary knowledge, but it seems to me that giving up some yield on a muni that is pre-funded buys significant safety at only slight cost. Not sure that if one were investing in muni fund it would be easy to find out how much of the portfolio is pre-funded, but it is certainly something I'd inquire about. Good luck to all ...